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I've been using Time Machine to back up my 1 TB hard drive, which is about 75% full. I use a 1.5 TB HD as my backup.

What I'm wondering is if anyone has had any experience actually relying on Time Machine to recover all their files after a HD crash. In the event of a crash, I want to be able to buy a new Mac, plug in my 1.5 TB backup drive, and restore my HD to what it was before the crash, with all the files, programs, etc.

My friend said that Time Machine is good for retrieving, say, a file that he accidentally deleted. But is it good for my purposes as well, or should I be doing something different. Manually backing up my data by doing compares and copying over changed files periodically is another option, but is certainly alot more work than letting TM do it's thing.

While a Time Machine backup is not bootable, it can certainly do what you're asking. Just fire up the OS X setup from the disc, then use the option to restore from a Time Machine backup. It'll copy over the necessary files and you'll pick up exactly where you left off.

Time Machine can indeed do what you are asking. I updgraded the hard drive on my MacBook a while ago, and after re-installing OS X, I was asked if I wanted to restore my computer from a Time Machine back up. I selected yes, and it copied all of my files and settings back to the computer exactly the way I left them on the old hard drive. It was literally like turning on my computer again, only now I had an additional 200GB of storage.

Same here. Time Machine in combination with cloning software is a great safety net. Like chas_M, I too have restored an entire hard drive from a Time Machine backup, and like he said... I also had a bootable CCC backup standing by "just in case".

With Snow Leopard, Time Machine is available off the Install/Upgrade disk so no other software is needed. Just pop the new disk in (its really easy if you have the right screwdriver), boot the Snow Leopard DVD, go to DIsk Utilities to partition/format the disk, plug in you old disk thru a usb, then go to utilities/Time Machine and restore to whatever point you want.

Note: Time Machine is pretty fast. I restored about 100 GB is less that 2 hours.